During the last decade, relatively high prices and expectations for rising Chinese demand led to significant investments in copper mining. Recent reports indicate these investments soon will lead to the biggest increase in copper production in 13 years.
Meanwhile, economic concerns in the United States and Europe have dampened demand for copper from the automobile and electronics industries, two major consumers of copper.
Rising supplies and weak demand have combined to drive copper prices sharply lower, falling by more than 30 cents per pound (- 8 percent) during the last month.
In the big picture, the strength of the U.S. housing market, China’s economic growth, and investor demand for copper all will play a role in copper’s value. As of midday Friday, copper was trading at $3.50 per pound, near three-month lows.
Hogs stage comeback
Hog prices declined to the lowest level in four months this week, falling to 78.25 cents per pound on Wednesday.
Pork has been plunging for the last few months amid tepid consumer demand and fears the sequester will further undercut meatpacking needs. Since late December, prices have fallen more than 13 cents (- 14.8 percent).
On Thursday, the market rebounded, gaining nearly 3 cents per pound (+ 3.2 percent), the biggest one-day rally in more than three months.
Some analysts attribute the rally to meatpackers buying aggressively as they saw pork prices of less than 80 cents as too cheap. Longer-term, bullish traders are hoping China will increase imports of U.S. pork. China is currently the third-largest buyer of U.S. pork.
As of midday Friday, April lean hogs were trading for 81.5 cents per pound.
A USDA report issued at midday Friday showed lower export demand for U.S. wheat and increased projections for the size of the global wheat supply. This report confirmed the wheat market’s fears of weak demand and rising supplies, knocking the grain lower.
Wheat prices have been falling in recent weeks as the Great Plains has been inundated with snow. Weather-watchers are increasingly predicting the recent snowfall and normal spring weather will provide the winter wheat crop with much-needed moisture.
As of midday Friday, wheat for delivery in March was trading at $6.80 per bushel, near the lowest price in eight months.
Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.